UK Gives a Tax Break to the Shallow-Water North Sea Gas Fields

By Cynthia Taylor

Britain has introduced a £500 million tax relief for the shallow water gas field in a bid to boost the dwindling North Sea energy yield at the same time it would like to see the gas market pay a key role above complementing renewable energy.

As of Wednesday new gas fields that have 10-20 billion cubic metres (bcm) reserves that arein depth locations that are under than 30 metres will be exempt from a 32% tax charge on its first £500 of income said the Treasury.

Gas in the UK is the single largest source of energy and today (Wednesday 25th July) the government has signaled its long term commitment to delivering secure, stable and a lower carbon energy mix. George Osborn, Chancellor of the Exchequer has expressed Britainís commitment.

He continued that projects will continue to pay a 30% of the Ring Fence Corporation Tax on all the income from the fields.

It is expected that this measure will place a burden of £20 million annually in reduced income; however the Treasury says that it will help Britainís with energy security and create additional jobs.

In the coming autumn the government will be announcing a new strategy for gas, this strategy will set out the role that the gas market will play in energy future of Britain.

In the Energy Bill, the proposed gas fired power stations will be the main technology that will back-up renewable energy that is intermittent such as solar and wind projects.

The DECC has said that they donít expect the role of gas to be a restricted one in providing back-up to the renewable energy mix, and over the long-term they see an important role with CCS (carbon capture and storage) for gas.